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Gold/Mining/Energy : Global Platinum & Gold (GPGI)
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To: Laser who wrote (7182)9/1/1998 11:46:00 PM
From: Zeev Hed  Read Replies (5) of 14226
 
Laser let's be rational here. Stillwater are really mining the stuff anywhere from 2000 to 3000 feet under the ground. Their average cost per ounce is $207 and since they have much more Pd then Pt, their average receipts per ounce are about $288. Not bad, but they have only .79 ounce per ton (of the main goodies, Pd and Pt).

Now let's look at GPGI, from the information we have and believe to be accurate. Their concentration is close to 3 ounces/ton (or $1000) and their costs at "puny production rates" are about $500/ton or possibly less. In rough numbers they get about $330/ounce (much more Rhodium and Pt very little Pd).

So, if what we are told is a good reflection of actualities, they'll bury Stillwater. GPGI can make money even if the average receipts for their goodies drop to $200/ounce, while Stillwater will have to wrap each ounce sold with a ten dollar bill.

All that said, how come Stillwater went up $5 or so today while GPGI went down? Could there be something wrong with the story I just presented? Is the market worried that last year we actually were using a figure of more than $2500 worth of goodies per ton? Do some people lose faith when some early figures of "at least" 16 ounces of goodies per ton were there earlier and have disappeared? Maybe the market is worried that the "concentration per ton" is going to continue down its "learning curve" and go under the break even point (about 1.5 Ounces per ton or so, if other figures "jive"). I do not know which if any of these are valid reasons for the weakness, but the weakness is evident and thus I say, beware.

Good luck

Zeev
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